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Traditional Ads Slow in 2Q; Overall Ad Spend on Pace for Record

31 Aug, 2016 By: Doug McPherson

NEW YORK – Traditional U.S. ads in second-quarter 2016 advertising rose 2.5 percent, slowing from the 4.3-percent gains registered in both fourth-quarter 2015 and first-quarter 2016, says MoffettNathanson Research.

Still, total advertising – thanks to digital media – was up 11.5 percent in the second quarter, after a 10.8-percent gain in the first quarter. The researcher predicts that for by the end of 2016, overall U.S. advertising is expected to climb 8.1 percent to $191.2 billion for the year.

“We think trends in the second half of 2016 will be more indicative of the long-term health of TV versus online advertising spending,” MoffettNathanson said in a statement.

Another industry analyst, London-based advertising researcher Warc, is also bullish on ad spending and says the U.S. ad spend will rise 5.8 percent to a record high of $178 billion – double the amount projected for the overall U.S. economy. It has previously estimated the U.S. ad market climbing 4.9 percent in 2016.

Warc says U.S. TV spending will rise 6.6 percent to $68 billion this year, due to increased spending on the Rio Olympics and the U.S. presidential election. Warc adds that U.S. digital media spending will grow at more than double the rate of TV – 13.7 percent. And overall, digital media will achieve near the same dollar value of the TV ad market this year – and is predicted to rise above TV next year.

MoffettNathanson says TV remains the leader in U.S. advertising. Improving TV spending in the first half of the year is now estimated to mean a rise of 6.6 percent to $80.3 billion. Faster-growing Internet/digital advertising spending will climb 21 percent to $72 billion.

Radio will add 2 percent to $17.7 billion, with newspapers sinking 8 percent to $16.9 billion; consumer magazines will rise 2 percent to $12.5 billion; and outdoor will inch up 1 percent to $7.4 billion.

MoffettNathanson Research says TV spending will sink 3.7 percent in 2017. But it will rise 2.6 percent in 2018 – when the Winter Olympics and midterm political advertising kick in.

Warc predicts the two other growth areas among U.S. media segments are in-theater advertising – 5.1 percent – and outdoor – 3.3 percent. Sinking categories are newspapers, diving 12.7 percent; magazines, off 12.4 percent; and radio, dipping 2.8 percent.

Warc says $553.70 is expected to be spent on advertising next year for every person in the U.S.

About the Author: Doug McPherson

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